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ASX-listed iSelect throws in the towel and sells to rival in acquisition, priced at 15% of its IPO market cap

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Nine years after it was listed on the ASX as one of the biggest floats of 2013, the board of comparison website iSelect has agreed to sell the company to rival Innovation Holdings Australia (IHA), owner of Compare the Market, in a deal that the company appreciates. at $72 million.

Start-up investor Thorney Investment Group, which has a 14.34% stake in iSelect (ASX: ISU), will support the takeover bid.

IHA already owns a 26% share of iSelect and is offering 30 cents a share – an 87.5% premium to the August 9 closing price of $0.16 cents; and a 70.6% premium to the one-month volume-weighted average price.

iSelect’s stock price has been on a steady decline since a record high of $2.20 in July 2017.

The company listed in June 2013 after raising $215 million at $1.85 per share for a market cap of $480 million. But on the day of the IPO, the stock took a big dent from the get-go when a major shareholder, Spectrum Equity Investors, lost 8% of the company, with the stock falling 30 cents to $1.55.

Within four months of the IPO, the CEO had left due to a ‘disagreement’.

Yesterday, iSelect’s board entered into a Scheme Implementation Agreement (SIA) with privately held IHA in a deal worth $72 million – just 15% of the company’s market cap on the exchange.

iSelect chairman Brodie Arnhold said the acquisition agreement “offers shareholders the opportunity to realize a significant premium to market value for their shares” and provides “security” in a cash offer.

“The iSelect directors unanimously recommend that shareholders vote in favor of the plan, provided there is no superior proposal and the independent expert concludes that the plan is in the best interests of iSelect shareholders,” he said.

Competition regulator ACCC will need to approve the deal, and it remains subject to shareholder and court approval. The shareholder will meet in October and all other signs continue. The acquisition and listing will take place sometime between December and March next year.

The company ran into trouble with investors in recent months after its March acquisition of $26.6 million of white-label comparison tech company Cimet, with its share price falling 15% in the wake of the deal to around $0. 20 cents.

IHA has been a critic of the acquisition, initially buying back as early as May 2018, when iSelect’s stock price was around $0.50 cents — half its mid-April price, the last time it was above $1.

Competition regulator ACCC will need to approve the deal, and it remains subject to shareholder and court approval. The shareholder will meet in October and all other signs continue. The acquisition and listing will take place sometime between December and March next year.

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